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Unformatted text preview: (b) It discourages workers from shirking out of fear of losing their high-paying job.
(c) e Condorcet Paradox suggests that paying high wages will result in greater e ort by employees. (d) By paying a high wage, employers solve this adverse selection problem and motivate the
employees to work harder.
. Which of the following is not correct?
(a) An example of adverse selection is man who tries to sell his used car without disclosing
that it needs a new transmission.
(b) e ”invisible hand” of a free market will always x the problems of adverse selection and
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- Spring '14